Reznik v. McKee

• Decision Date: 05 April 1975
• Docket Number: No. 47578,47578
• Citation: 216 Kan. 659,534 P.2d 243
• Parties: Katherine S. REZNIK and William H. Seed, Jr., Appellees, v. Mabel H. McKEE, Trustee, et al., Appellants.
• Court: Kansas Supreme Court

Page 243

534 P.2d 243

216 Kan. 659

Katherine S. REZNIK and William H. Seed, Jr., Appellees, v. Mabel H. McKEE, Trustee, et al., Appellants.

No. 47578.

Supreme Court of Kansas.

April 5, 1975.

Syllabus by the Court

1. Where inter vivos revocable trusts executed by a husband and wife, making disposition of the major portion of their estates, are effectively used as will substitutes in an overall estate plan, the law in Kansas relating to contractual wills is applicable in determining whether such inter vivos trusts were executed pursuant to a contract, which is enforceable as a claim against the estate of the settlor breaching it.

2. A single instrument may be both a will contractual in nature, and a contract testamentary in nature; as a will it is revocable but as a contract it is enforceable; and although a contractual will revoked by execution of a second will, cannot be probated, it may nonetheless be enforced as a contract against the estate of the testator breaching it.

3. The existence or non-existence of an agreement or contract is in its very nature a fact. If a joint and mutual will is the result of a contract, under which the making of each will is consideration for making the other, it is necessary to establish that fact by direct or circumstantial evidence.

4. It is essential to the validity and enforcement of a contract for the execution of wills containing bequests and devises, which are reciprocal between the parties, that the contract be definite, certain and unequivocal as to the parties, the subject matter and the considerations.

5. Where a joint and mutual will is executed by a husband and wife the will itself and its terms may be taken into consideration as circumstantial evidence upon which to base a finding that the will is contractual.

6. Where a joint and mutual will shows on its face by the terms and provisions thereof that it is contractual in character, extrinsic evidence is not admissible for the purpose of proving otherwise.

7. When the evidence from which the trial court's findings are made is wholly written and documentary in form, the reviewing court must decide for itself what the facts establish, substantially as it would if the case was originally in this court, for the trial court has no better opportunity to weigh the evidence than a court of review with the same evidence before it.

8. It is a general principle of contract law that a court may ascertain the existence and terms of an agreement from a combination of written instruments and the acts of the parties in connection therewith.

9. A provision frequently considered by the court in determining whether joint or mutual wills are contractual, where specific reference to a prior contract is lacking, is the manner in which all of the parties' remaining property will be distributed upon the death of the survivor.

10. A provision to be considered in determining whether joint or mutual wills are made pursuant to a contract is whether there are carefully drawn provisions for the disposition of any share in case of a lapsed residuary bequest.

11. The manner in which trust instruments are executed may provide evidence that the parties were disposing of their estates pursuant to an agreement.

12. Where a husband and wife execute inter vivos revocable trusts which are used as will substitutes in an overall estate plan, reciprocal provisions in the respective trusts whereby the husband makes their grandchildren the primary beneficiaries of his trust and omits their children from the trust, and the wife makes their children the primary beneficiaries of her trust and omits their grandchildren, each explaining the respective omissions in their own trust by referring to the provision made in the other's trust, are persuasive considerations indicating that the execution of the inter vivos trusts was preceded by negotiation and agreement between the settlors concerning the manner in which their children and grandchildren would be treated under the estate plan as a whole.

13. Where a husband and wife execute inter vivos revocable trusts which are used as will substitutes in an overall estate plan, and the settlors during their lifetime make various amendments to the original trust instruments, each obtaining the 'joinder' and 'consent' of his or her spouse, retaining the same basic estate plan through the various amendments, a contractual agreement between the settlors is indicated on facts more particularly set forth in the opinion.

14. There is no inconsistency between the fact that the settlors of inter vivos trusts, used as will substitutes in an overall estate plan, expressly reserved the right to alter, amend or revoke their respective trusts, and the construction of the trust instruments as being contractual in nature.

15. The reservation of a right of each settlor to amend or revoke his or her inter vivos trust proves nothing concerning the existence or non-existence of a contract. There is no substantial reason why revocable trusts should be treated differently than joint or mutual wills which are ambulatory and may be revoked or amended at any time before the testator's death.

16. Attorney's fees and expenses may not be allowed against the estate of a decedent unless authorized by statute.

17. Where an action is brought to enforce a contract as a claim against the estate of a decedent, the plaintiffs' attorney fees are not chargeable against the estate of the decedent even though they are successful in the litigation.

William Tinker, McDonald, Tinker, Skaer, Quinn & Herrington, Wichita, argued the cause, and Larry D. Shoaf, Wichita, was with him on the brief for appellants.

Donald R. Newkirk, Fleeson, Gooing, Coulson & Kitch, Wichita, argued the cause, and Thomas D. Kitch, Wichita, was with him on the brief for appellees.

SCHROEDER, Justice:

This is an appeal from a judgment of the district court of Sedgwick County, Kansas, finding that inter vivos reciprocal trusts created by H. W. Cardwell and Katherine Cardwell were contractual in nature, and enforcing the provisions of the trust created by H. W. Cardwell for the benefit of the plaintiffs (appellees herein) against his estate, which is being administered by the defendant trustees (appellants herein) in accordance with the provisions of the H. W. Cardwell Revocable Trust as amended. The trial court found H. W. Cardwell had breached an agreement with his wife by failing to leave certain property for the plaintiffs (who are two of his grandchildren) in trust upon his death. The trial court ordered reinstatement of the written trust provisions creating such benefits, which had been revoked by H. W. Cardwell prior to his death.

The underlying question is whether the provisions made for the benefit of the plaintiffs in the H. W. Cardwell Revocable Trust as amended January 17, 1962, later cancelled by an amendment to that trust dated May 31, 1965, after the death of Katherine Cardwell, were made pursuant to an agreement or contract, which can be enforced as a claim against the estate of H. W. Cardwell, deceased.

The evidence presented to the trial court consisted of the trust documents and various amendments thereto, the charter of Charitable Foundation, Inc., the pleadings, interrogatories and answers filed by both parties. A summary of the pertinent provisions contained in the seven trust documents involved in this litigation is essential.

In August of 1960 H. W. Cardwell, and his wife, Katherine S. Cardwell, resided in Wichita, Kansas. They had two children, H. W., Jr., and Jean Anne, who were married adults and each had two children, so that Mr. and Mrs. Cardwell had an immediate family of two children and four grandchildren. The Cardwells were wealthy people possessing a combined estate in excess of $4,000,000 at that time.

On August 12, 1960, Mr. and Mrs. Cardwell executed separate instruments denominated the 'Katherine S. Cardwell Revocable Trust' and the 'H. W. Cardwell Revocable Trust'. Their entire combined estate was settled in these two trusts. The preamble in Mr. Cardwell's trust recites that he is 'joined herein by my wife, Katherine S. Cardwell' and that he is delivering all of his property, both real and personal, to himself and to Mabel H. McKee (one of the appellants herein) as cotrustees. In the same manner, the preamble in Mrs. Cardwell's trust recites that she is 'joined herein by my husband, H. W. Cardwell' and that she is delivering all of her property, both real and personal, to H. W. Cardwell as trustee.

Each settlor was joined in the execution of his or her trust by the other spouse who expressly consented to the terms and provisions of the instrument and waived all rights as the settlor's spouse in and to the trust property under law.

Each trust directs the trustees to distribute all income from the trust property to the settlor during his or her lifetime 'at such intervals and in such amounts as the settlor may from time to time direct'. The same provision also authorizes the settlor 'to withdraw from time to time, and at any time, any part of the Trust Estate.' Each settlor reserved the right to alter, amend or revoke in whole or in part, his or her trust by delivering a written instrument to the trustees then serving.

Article II of each trust makes provision for the disposition of specific personal property upon the death of the settlor. Certain personal property (jewelry and clothing) is to be distributed outright upon the settlor's death and other specified personal property (automobiles, household property and stock) is to be held or used by the surviving spouse for life with the remainder over to other named beneficiaries.

In the last paragraph in Article II, paragraph 2.7, of each instrument the settlor explains the omission of certain heirs. Mr. Cardwell's trust recites:

'Settlor makes no provision for distributions for the primary benefit of Settlor's children for the reason that he has previously made...